Federal tax update for 2016 tax returns

1. YOU are REQUIRED TO FILE an income tax return if your 2016 gross income reaches:

A. Single  $10,300 (11,850 age 65 or older)

B. Married filing jointly  $20,300 (21,850 age 65 or older, one spouse) (23,000 both spouses)

C. Married filing separately $4,000 (any age)

D. Head of household $13,250 (14,800 age 65 or older)

E. Qualifying widow (er) $16,600 (17,850 age 65 or older)

Elderly and blind taxpayers add $1,250 to $1,550.

2. PERSONAL EXEMPTIONS: $ 4,050 (same in 2016). Phase-outs for personal itemized deduction and personal exemption begins at: single $261,500, head of househo$287,650, married filing joint and surviving spouse $313,800, and married filing separate $156,900.

3. STANDARD DEDUCTIONS: If your combined itemized deductions for interests, taxes, medical and contributions are less than the following amounts, use the following standard deductions:

A. Single $6,300 (6,350 for 2017)

B. Married filing jointly $12,600 (12,700 for 2017)

C. Married filing separately $6,300 (6,350 for 2017)

D. Head of household $ 9,300 (9,350 for 2017)

Elderly and blind taxpayers get an extra $1,250 for married and $1,550 for unmarried.

4. CHILD TAX CREDIT: maximum credit amount is $1,000 per child (consists of refundable and non-refundable components).

5. EDUCATION CREDITS:

A. American Opportunity Credit (HOPE): maximum annual credit is $2,500 per eligible student was made permanent and 40%  refundable.

B.  Lifetime Learning Credit: maximum annual credit is $2,000 per return and is not refundable.

6. RETIREMENT PLANS LIMITS:

A. IRA contribution limits $5,500 ($6,500 age 50 or older).

B. SIMPLE IRA elective deferral limits 12,500 ($15,500  age 50 or over).

C. 401(k), 403(b), 457 elective deferral limits $18,000 ($24,000 age 50 or older).

D. Profit-sharing plan/SEP contribution limits 53,000   ($54,000 in 2017).

7.STANDARD MILEAGE RATES:

A.  Business: 54.05¢ per mile.

B.  Medical and Moving: 19¢ per mile.

C.  Charity: 14¢ per mile.

8. LONG-TERM CARE INSURANCE DEDUCTION LIMITS: $390 to $4,870 depending on age. ($410 to $5,110 for 2017)

9. ALTERNATIVE MINIMUM TAX (AMT) EXEMPTION AMOUNT INCREASED. The AMT exemption amount is increased to $53,900 ($83,800 if married filing jointly and $41,900 if married filing separately).

10. FOREIGN EARNED INCOME EXCLUSION: $101,300.

11. SOCIAL SECURITY TAXES FOR NEXT YEAR 2017:

A. Minimum earnings to be covered by SS increases to $5,200 from $5,040 ($1,300 per quarter).

B.  Maximum earnings allowed for 65 increases to $16,920 from $15,720.

C.  Maximum amount subject to FICA increases to $127,200 from $118,500.

D.  Early retirement age is 62, full retirement 66 (born 1960 & later).

12. ESTATE AND GIFT TAXES FOR

A. Estate/gift tax Exclusion:

2016 – $5,540,000 2017 – $5,490,000

B. Annual gift tax exclusion:

2016  – $14,000 2017  – $14,000

In accordance with IRS Circular 230, this communication is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purpose.

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Al-os & Associates  Accountancy Corporation provides accounting and tax services to individuals, corporations, LLCs and business entities. The Firm has a niche in defending taxpayers audited by the IRS and other governmental agencies.

 

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